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Conatus Stock Up on Liver Drug Collaboration with Novartis
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Conatus Pharmaceuticals Inc. announced that it has entered into an exclusive option, collaboration and license agreement with Novartis AG (NVS - Free Report) for the worldwide development and commercialization of its lead candidate, emricasan.
Following the news, Conatus’ shares surged almost 125% in Monday’s after-hours trading session. Moreover, in the pre-market trading session on Tuesday shares are up almost 135%.
A look at Conatus’ year-to-date share price movement shows that the company has underperformed the Zacks classified Medical Products industry. Specifically, the stock lost 31.9% so far this year, compared with the 0.9% rise for the industry.
Shares of Novartis have also underperformed the Zacks classified Large Cap Pharmaceutical industry so far this year. The company lost 16.7% during this period, compared to the industry’s drop of 5.1%.
Coming back to the latest news, emricasan, a first-in-class, orally active pan-caspase protease inhibitor, is being developed for the treatment of chronic liver disease.
Terms of the Agreement
Conatus will receive an upfront payment of $50 million from Novartis. Also, the company is eligible to receive $7 million upon the exercise of the license option. Moreover, Conatus can borrow up to $15 million in the form of convertible promissory notes.
As per the terms of the agreement, Conatus is eligible to receive significant payments for certain development, regulatory and commercial milestones, as well as tiered double-digit royalties on emricasan single-agent sales, and tiered single- to double-digit royalties on sales of combination products containing emricasan.
Conatus also has the option to co-commercialize the candidate in the U.S. on a cost-sharing and revenue-sharing basis in lieu of U.S. royalties and lower ex-U.S. royalties. However, the company has limited rights to develop other pan-caspase inhibitors.
On the other hand, Novartis will contribute 50% of the development costs related to Conatus' phase IIb studies on emricasan – ENCORE-PH in primarily compensated nonalcoholic steatohepatitis (NASH) cirrhosis, POLT-HCV-SVR in post-transplant hepatitis C virus fibrosis and cirrhosis, ENCORE-NF in NASH fibrosis, and the planned ENCORE-LF (expected to begin in the first half of 2017) in de-compensated NASH cirrhosis.
Novartis will also be responsible for conducting phase III studies on emricasan as a single treatment and starting the development of combination therapies with Farnesoid X receptor (FXR) agonists.
The strategic agreement with Novartis not only lends expertise to Conatus, but also provides the company with much-needed funds for the development for emricasan. The cost-sharing arrangement will allow Conatus to fund its ongoing operations through 2019.
NASH is predicted to become the leading cause of liver transplantation by 2020. Around 3–5% of the U.S. population is suffering from NASH at present. With no treatment currently approved for this disease, the market opportunity is tremendous.
Both Conatus and Novartis currently carry a Zacks Rank #3 (Hold).
Vanda’s loss estimates for 2016 narrowed from 62 cents to 52 cents, while its earnings estimates for 2017 increased from 13 cents to 22 cents over the last 60 days. The company posted a positive earnings surprise in three of the four trailing quarters with an average beat of 56.65%. Its share price has surged almost 72% year to date.
Cambrex’s earnings estimates increased from $2.46 to $2.55 for 2016 and from $2.91 to $3.06 for 2017 over the last 60 days. The company posted a positive earnings surprise in three of the four trailing quarters with an average beat of 19.78%. Its share price has surged almost 14% year to date.
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Conatus Stock Up on Liver Drug Collaboration with Novartis
Conatus Pharmaceuticals Inc. announced that it has entered into an exclusive option, collaboration and license agreement with Novartis AG (NVS - Free Report) for the worldwide development and commercialization of its lead candidate, emricasan.
Following the news, Conatus’ shares surged almost 125% in Monday’s after-hours trading session. Moreover, in the pre-market trading session on Tuesday shares are up almost 135%.
A look at Conatus’ year-to-date share price movement shows that the company has underperformed the Zacks classified Medical Products industry. Specifically, the stock lost 31.9% so far this year, compared with the 0.9% rise for the industry.
Shares of Novartis have also underperformed the Zacks classified Large Cap Pharmaceutical industry so far this year. The company lost 16.7% during this period, compared to the industry’s drop of 5.1%.
Coming back to the latest news, emricasan, a first-in-class, orally active pan-caspase protease inhibitor, is being developed for the treatment of chronic liver disease.
Terms of the Agreement
Conatus will receive an upfront payment of $50 million from Novartis. Also, the company is eligible to receive $7 million upon the exercise of the license option. Moreover, Conatus can borrow up to $15 million in the form of convertible promissory notes.
As per the terms of the agreement, Conatus is eligible to receive significant payments for certain development, regulatory and commercial milestones, as well as tiered double-digit royalties on emricasan single-agent sales, and tiered single- to double-digit royalties on sales of combination products containing emricasan.
Conatus also has the option to co-commercialize the candidate in the U.S. on a cost-sharing and revenue-sharing basis in lieu of U.S. royalties and lower ex-U.S. royalties. However, the company has limited rights to develop other pan-caspase inhibitors.
On the other hand, Novartis will contribute 50% of the development costs related to Conatus' phase IIb studies on emricasan – ENCORE-PH in primarily compensated nonalcoholic steatohepatitis (NASH) cirrhosis, POLT-HCV-SVR in post-transplant hepatitis C virus fibrosis and cirrhosis, ENCORE-NF in NASH fibrosis, and the planned ENCORE-LF (expected to begin in the first half of 2017) in de-compensated NASH cirrhosis.
Novartis will also be responsible for conducting phase III studies on emricasan as a single treatment and starting the development of combination therapies with Farnesoid X receptor (FXR) agonists.
The strategic agreement with Novartis not only lends expertise to Conatus, but also provides the company with much-needed funds for the development for emricasan. The cost-sharing arrangement will allow Conatus to fund its ongoing operations through 2019.
NASH is predicted to become the leading cause of liver transplantation by 2020. Around 3–5% of the U.S. population is suffering from NASH at present. With no treatment currently approved for this disease, the market opportunity is tremendous.
Both Conatus and Novartis currently carry a Zacks Rank #3 (Hold).
Key Picks in the Sector
A couple of better-ranked stocks in the health care sector are Vanda Pharmaceuticals Inc. (VNDA - Free Report) and Cambrex Corporation . Both the stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Vanda’s loss estimates for 2016 narrowed from 62 cents to 52 cents, while its earnings estimates for 2017 increased from 13 cents to 22 cents over the last 60 days. The company posted a positive earnings surprise in three of the four trailing quarters with an average beat of 56.65%. Its share price has surged almost 72% year to date.
Cambrex’s earnings estimates increased from $2.46 to $2.55 for 2016 and from $2.91 to $3.06 for 2017 over the last 60 days. The company posted a positive earnings surprise in three of the four trailing quarters with an average beat of 19.78%. Its share price has surged almost 14% year to date.
Zacks' Top Investment Ideas for Long-Term Profit
How would you like to see our best recommendations to help you find today’s most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>